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WTI oil reaches highest since 2014 on Iran worries

07 May, 2018, 15:17 | Author: Shawna Walton
  • Crude rises on geopolitical jitters; July ICE Brent at $73.82/b, June NYMEX WTI $68.56/b

Futures in NY and London jumped as much as 1.4%.

Oil prices have been climbing partly because of expectations that U.S. president Donald Trump will abandon the 2015 Iran nuclear deal, which allowed Tehran to export more crude, reports CNN.

Iran re-emerged as a major oil exporter in 2016 after worldwide sanctions against it were lifted in return for curbs on Iran's nuclear programme.

European powers still want to hand Trump a plan to save the Iran nuclear deal next week, but they have also started work on protecting EU-Iranian business ties if the US president makes good on a threat to withdraw, six sources told Reuters. Top crude oil exporter Saudi Arabia's, for its part, exported 9.3 million bpd in January, while Russian Federation exported 7.4 million bpd, the bank added. The group will meet next month in Vienna.

Beyond Venezuela's woes, Greg McKenna, chief market strategist at futures brokerage AxiTrader, said "the big story this week is going to be about oil and the Iran Nuclear deal".

Although imposing sanctions on Iran would disrupt oil markets, the immediate impact on prices may end up being quite limited when the decision is actually announced because investors are already pricing it in.

US West Texas Intermediate (WTI) crude futures rose 70 cents, or 1%, to $70.42 per barrel. Total volume traded was about 48 percent below the 100-day average.

Brent crude oil futures were at $75.55 per barrel at 0945 GMT, up 0.9 percent and having also touched their highest since November 2014. Prices climbed 0.3% last week.

Prices jumped 1.9 percent on Friday to close at the highest level since November 2014. On Wednesday, the U.S. Energy Information Administration said the U.S. crude exports last week increased by 582,000 bpd to 2.331 bpd, an all-time high. Trump has to decide by May 12 whether to bring back sanctions against the country. But, he added, "That doesn't mean I wouldn't negotiate a new agreement".

If the United States does decide to withdraw from the deal, as many analysts expect, that would be bullish for oil prices in the long-term, although some expect that if a withdrawal has been baked into current levels for crude, an immediate sell-off could follow.

Oil traders are concerned that sanctions against Iran could cut oil supplies.

As global oil markets shift their attention from USA shale oil production back to a resurgent Saudi Arabia and Russian Federation and geopolitical concerns bearing down on oil prices, Citigroup said last Wednesday that the U.S.is poised to surpass Saudi Arabia next year as the world's largest exporter of crude and oil products. Saudi Arabia remains the world's largest exporter of crude, though since January amid the OPEC/non-OPEC production cut agreement that figure has fallen.

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